Telkom Kenya CEO Mickael Ghossein addresses a news conference at the company offices in Nairobi, March 23, 2012
Telkom Kenya’s top management Friday came out to fight claims that the company was experiencing financial distress and in is need of a Sh10 billion bailout from taxpayers.
The company’s board chairman Eddy Njoroge and its Chief Executive Mickael Ghossein were united in saying that the firm will be able to meet its financial obligations owed to banks but did not provide financial statements to back its financial health.
“We are in a position to meet all our financial obligations to banks and if we don’t, then there is no reason for them to worry because there are penalties. The next time we are due for repayment is between November and December,” Mr Ghossein told a press conference to react to stories reported by Daily Nation this week adding that the company has been repaying promptly about Sh230million in interest per month.
He confirmed that the company has a Sh41 billion from its parent shareholder--France Telecom--and the government of Kenya. He said the company owes Sh38billion to its parent company which has a 51 per cent stake in it. The remaining is owed to the government of Kenya which owns 49 per cent of the company. The company said it also owes Kenya Commercial Bank and Standard Charted Banks about one billion shillings each.
On his part, Mr Njoroge maintained that like any other company, Telkom Kenya Limited, was in order to seek development capital from its shareholders first before considering other options.
“As a company, the reports have raised a lot of anxiety and speculation and by large, portrayed the company in bad light among different stakeholders. These reports have painted a picture of a company that is struggling and one that is on the brink of collapse; which is not the case,” Mr Njoroge said.
According to Mr Njoroge, the money the company is seeking is expected to support its strategic plan and that it is still premature to know exactly how much the company will be seeking before the an Extra-ordinary General Meeting (EGM) scheduled for April 11.
“Early this year, the management proposed to the board, a strategic plan running through to 2016 which is still under validation by the board,” he said.
It has partly blamed its woos on the Communication Commission of Kenya (CCK)’s move to cut interconnection fees which sparked a major price war in the telecoms sector that saw calling rates more than halved.
CCK, the sector’s regulator, has however on numerous occasions maintained that the termination rates were sustainable and that there was room for further drop. It has also cited vandalism as another major reason delaying its return to profitability.
The country spent more than Sh90 billion of taxpayers’ money to prepare the company for sale to French Telecom in 2007, that resulted in a loss of 16,100 jobs in five years.
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